Simon Donohue

Capital & Regional has sold Manchester's Great Northern Warehouse to Resolution Property for £71.1m.

The group said some of the proceeds of the sale will be used to pay off the loan secured on the property, wiping out all debt on its balance sheet.

Capital is entitled to additional deferred consideration resulting from the installation and letting of a digital media screen at the property. This will be subject to obtaining planning consent.

Taking into account the deferred consideration and the deduction of rent free top ups, Capital expects the total consideration receivable to be close to the £72.5m valuation of the property as at 30 June 2013. Capital's borrowings are secured against the asset totalled £57.5m at a loan to value of 79%.

Completion of the sale is expected to take place at the end of October 2013.

Great Northern Warehouse contributed £1m to Capital's profit for the six months ended 30 June 2013. Capital will use any funds available to re-invest in its core shopping centre business.

Hugh Scott-Barrett, chief executive of Capital & Regional, said: "The disposal of Great Northern Warehouse is a critical milestone in the delivery of the company's strategy, as it results in the repayment of all the remaining on-balance sheet debt and further reduces the company's see through net debt to value.

"It also facilitates further re-investment in our core UK Shopping centre business as we continue to execute our strategy for growth."

Resolution Property, London, is a property fund which has traditionally raised equity to buy investment properties every few years. It did not own any Manchester assets after selling the Printworks to Land Securities for £93.9m in November last year.